Exam 6: Elasticity: the Responsiveness of Demand and Supply

Suppose Québec's largest nursing union, Fédération interprofessionelle de la santé du Québec (FIQ), successfully secured a 12 percent increase in the wages of registered nurses.If a hospital responds by reducing the quantity of registered nurses hired and increasing the quantity of physician's assistants hired, what conclusion can you draw?

Consider the following pairs of items: a)shampoo and conditioner b)iPhones and earbuds c)a laptop computer and a desktop computer d)beef and pork e)air-travel and weed killer Which of the pairs listed will have a negative cross-price elasticity?

As high gasoline prices persisted into the first part of 2011, consumers began driving less and using public transportation more.Over time, this caused the demand curve for gasoline to become ________ and the quantity of gasoline demanded to ________.

If firms do not increase their quantity supplied when price changes, then supply is

Suppose the price of gasoline is $1.25 per litre, the quantity of gasoline demanded is 40 billion litres per year, the price elasticity of demand for gasoline is -0.06, and the federal government decides to increase the excise tax on gasoline by $0.75 per litre, which increases the price of gasoline by $0.50 per litre.How much revenue does the federal government receive from the tax?

A study of the effects of the minimum wage on employment of low-skilled workers estimated the price elasticity of demand for low-skilled workers is -0.75.Suppose that the government of New Brunswick is considering raising the minimum wage from $10.00 per hour to $10.60 per hour.Based on this information, calculate the percentage change in the employment of low-skilled workers.Use the midpoint formula.

Cross-price elasticity of demand is calculated as the

If a firm lowered the price of the product it sells and found that total revenue did not change, then the demand for its product is

Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil?

Figure 6.6 -Refer to Figure 6.6.A unit-elastic supply curve is shown in

Suppose the absolute value of the price elasticity of demand for meals at Fortune Buffet House is ∞.What happens to sales revenue if the restaurant increases its price by 5 percent?

If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because

If a firm's goal is to maximize revenue, it will price its product to correspond to the unit-elastic segment of its demand curve.

Last year, Sefton purchased 60 pounds of potatoes to feed his family of five when his household income was $30,000.This year, his household income fell to $20,000 and Sefton purchased 80 pounds of potatoes.All else constant, Sefton's income elasticity of demand for potatoes is

Suppose the value of the price elasticity of demand is -3.What does this mean?

Suppose that the price of a money clip increases from $0.75 to $0.90 and quantity supplied rises from 8,000 units to 10,000 units.Use the midpoint formula to calculate the price elasticity of supply.

If you expect the economy is going to boom and average income in the economy will rise in the foreseeable future, the type of firm that would be able to increase its sales if your expectations are met is

Which of the following statements about the price elasticity of demand is correct?

Jonah lives in a small town where there is only one Mexican restaurant.Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?

Consider the following pairs of items: a)shampoo and conditioner b)iPhones and earbuds c)a laptop computer and a desktop computer d)beef and pork e)air-travel and weed killer Which of the pairs listed will have cross-price elasticity of zero?